What changed
RBI issued a master circular consolidating the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977, updated as on June 30, 2008. The circular reproduces the original 1977 notification (DNBC.39/DG(H)-77). It supersedes earlier directions from 1973 and applies to companies in Jammu and Kashmir and India conducting specified businesses.
What it means for you
For banks, this circular reaffirms the regulatory framework for MNBCs, which are often clients or counterparties. Banks should be aware of the scope of MNBC activities as defined in the directions.
What you must do
- Review your NBFC client portfolio to identify any Miscellaneous Non-Banking Companies covered by these directions.
- Ensure MNBC clients comply with the directions as consolidated in this circular.
- Update internal due diligence checklists to reference the 1977 Directions as consolidated in this circular.
- Train relationship managers on the scope of MNBC activities (e.g., prize chits, savings schemes) to spot red flags.
Who it affects
Miscellaneous Non-Banking Companies (MNBCs), Banks with NBFC lending or deposit relationships
What types of companies are covered under these directions?
The directions apply to financial institutions that are companies and carry on business like collecting money via subscriptions or contributions for prize schemes, savings arrangements, or chit fund-like transactions, as detailed in the circular.
Does this circular introduce new rules for MNBCs?
No, it is a master circular consolidating the existing 1977 Directions as of June 30, 2008. No new requirements were added; it merely updates the reference text.
How should banks use this circular?
Banks should use it as a compliance reference when dealing with MNBC clients, ensuring they follow the directions under the 1977 Directions.